1. Define BPM.
“A framework for organizing, automating, and analyzing business methodologies, met-rics, processes, and systems to drive the overall performance of the enterprise. It helps organizations translate a unified set of objectives into plans, monitor execution, and deliver critical insight to improve financial and operational performance.”
2. How Does BPM differ from BI? How are they the same?
BPM is an outgrowth of BI and extends it. BI needs to be extended to support BPM properly.
• BPM is promoted and sold by the same companies that market and sell the BI tools and suites.
• BI has evolved so that many of the original differences between the two no longer exist (e.g., BI used to be focused on departmental rather than enterprise-wide projects).
• BI is a crucial element of BPM.
3. List the major BPM processes.
1. Strategize
2. Plan
3. Monitor
4. Act and Adjust
4. Why does a company need a well-formulated strategy?
“Without specific goals or objectives, it is difficult to evaluate alternative courses of action. Without specific priorities, there is no way to determine how to allocate resources among the alternatives selected. Without plans, there is no way to guide the actions among those working on the alternatives. Without analysis and evaluation, there is no way to determine which of the opportunities are succeeding or failing. Goals, objectives, priorities, plans, and critical thinking are all part of a well-defined strategy.”
5. What are the basic tasks in the strategic planning process?
1. Conduct a current situation analysis
2. Determine the planning horizon
3. Conduct an environmental scan
4. Identify critical success factors
5. Complete a gap analysis
6. Create a strategic vision
7. Develop a business strategy
8. Identify strategic objectives and goals
6. What are some of the sources of the gap between formulating a strategy and actually executing the strategy?
Communications, Alignment of rewards and Incentives, Focus, and Resources
7. What is the goal of operational planning?
An operational plan translates an organization’s strategic objectives and goals into a set of well-defined tactics and initiatives, resource requirements, and expected results for some future time period, usually, but not always, a year—in other words, to make the strategic plan into a useful guide for operational decision making.
8. What is tactic-centric planning? What is budget-centric planning?
These are two approaches to operational planning.
In tactic-centric planning, the focus is on arriving at tactics that will meet the strategic goals. After those have been arrived at, the cost of implementing them is consi-dered. If it exceeds the organization’s willingness to spend, the plan can be revised.
In budget-centric planning, the focus is on arriving at tactics that meet financial targets. After these have been arrived at, the results of using them are considered. If they do not meet the organization’s strategic goals, the plan can be revised.
9. What is the primary goal of a financial plan?
The primary goal is to allocate resources in line with the organization’s needs and priorities.
10. What are the critical questions that a monitoring framework answers?
What to monitor, and How to monitor
11. What are the key elements of a diagnostic control system?
Inputs, a process for transforming inputs into outputs, a standard against which to compare these outputs, and a feedback channel allowing information on variances to be communicated so that it can be acted upon.
12. What is management by exception?
A management approach whereby the great majority of management’s time and attention is focused on areas in which a diagnostic control system identified significant variations from the standard, in order to investigate the cause of the variation and initiate appropriate action.
13. What is one of the major pitfalls of variance analysis, from a managerial perspective?
A correct answer can discuss either:
1. Focus on identifying, diagnosing and correcting negative variances, thus failing to capitalize on opportunities that might be signaled by positive variances.
2. Take the comparison standard as given, not considering the possibility that changed circumstances or invalid assumptions might make the standard wrong rather than the process being at fault.
14. Why do 60 to 80 percent of all new projects or ventures fail?
A project can fail in a number of different ways, ranging from considering too few options or scenarios, failing to anticipate a competitor’s moves, ignoring changes in the economic or social environment, inaccurately forecasting demand, or underestimating the investment required to succeed, just to name a few of the possibilities. This
15. Describe the basic steps in Harrah’s closed-loop model.
1. The loop begins by defining quantifiable objectives of a marketing campaign or test procedure in the form of expected values or outcomes for customers who are in the experimental test group versus those in the control groups. The campaign is designed to provide the right offer and message at the right time. The selection of customers and their treatments are based on their prior experiences with Harrah’s.
2. Next, the campaign or test is executed. The campaign is designed to provide the right offer and message at the right time. The selection of particular customers and the treatments they receive are based on their prior experiences with Harrah’s.
3. Each customer’s response to the campaign is tracked. Not only are response rates measured, but other metrics are as well, such as revenues generated by the incentive and whether the incentive induced a positive change in behavior (e.g., increased frequency of visit, profitability of the visit, or cross-play among the various casinos).
4. The effectiveness of a campaign is evaluated by determining the net value of the campaign and its profitability relative to other campaigns.
5. Harrah’s learns which incentives have the most effective influence on customer behavior or provide the best profitability improvement. This knowledge is used to continuously refine its marketing approaches.
16. According to the Saxon Group’s research results, what are some of the performance management practices of the average company?
The overall impact of the planning and reporting practices of the average company was that management had little time to review results from a strategic perspective, decide what should be done differently, and act on the revised plans. The fact is that there was little tie between a company’s strategy, tactics, and expected outcomes (Axson, 2007).
17. Why do few companies have time to analyze their strategic and tactical results and take corrective action based on this analysis?
Because planning and reporting take so much time, management has little time left to review results from a strategic perspective, decide what should be done differently, and act on that decision.
Several other reasons are given in this section as well. A correct answer may reflect any of them.
18. What is a performance measurement system?
A system whose purpose is to “Assist managers in tracking the implementations of business strategy by comparing actual results against strategic goals and objectives. A performance measurement system typically comprises systematic methods of setting business goals together with periodic feedback reports that indicate progress against goals.”
19. What is a KPI, and what are its distinguishing characteristics?
KPIs are multidimensional. Loosely translated, this means that KPIs have a variety of distinguishing features, including:
• Strategy. KPIs embody a strategic objective.
• Targets. KPIs measure performance against specific targets. Targets are defined in strategy, planning, or budget sessions and can take different forms (e.g., achievement targets, reduction targets, absolute targets, etc.).
• Ranges. Targets have performance ranges (e.g., above, on, or below target).
• Encodings. Ranges are encoded in software, enabling the visual display of performance (e.g., green, yellow, red). Encodings can be based on percentages or more complex rules.
• Time frames. Targets are assigned time frames by which they must be accomplished. A time frame is often divided into smaller intervals to provide performance mileposts.
• Benchmarks. Targets are measured against a baseline or benchmark. The previous year’s results often serve as a benchmark, but arbitrary numbers or external benchmarks may also be used.
20. How does a KPI differ from an operational metric?
Most organizations collect a wide range of operational metrics. As the name implies, these metrics deal with the operational activities and performance of a company. The following list of examples illustrates the variety of operational areas covered by these metrics:
• Customer performance. Metrics for customer satisfaction, speed and accuracy of issue resolution, and customer retention.
• Service performance. Metrics for service-call resolution rates, service renewal rates, SLA compliance, delivery performance, and return rates.
• Sales operations. New pipeline accounts, sales meetings secured, conversion of inquiries to leads, and average call closure time.
• Sales plan/forecast. Metrics for price-to-purchase accuracy, purchase order to fulfillment ratio, quantity earned, forecast-to-plan ratio, and total closed contracts.
21. What are some of the drawbacks of relying solely on financial metrics for measuring performance?
The text cites these four:
• Financial measures are usually reported by organizational structures (e.g., research and development expenses) and not by the processes that produced them.
• Financial measures are lagging indicators, telling us what happened, not why it happened or what is likely to happen in the future.
• Financial measures (e.g., administrative overhead) are often the product of allocations that are not related to the underlying processes that generated them.
• Financial measures are focused on the short term, and provide little information about the longer term.
22. What is the principle of obliquity?
Michael Hammer’s principle of obliquity states that the measures management tracks are generally those which it cannot control directly (but only obliquely, hence the name of the principle). This leads to the conclusion that some way of influencing these measures through management action is necessary.
23. What are some of the characteristics of a “good” collection of performance measures?
The text cites the following five:
• Measures should focus on key factors.
• Measures should be a mix of past, present, and future.
• Measures should balance the needs of shareholders, employees, partners, suppliers, and other stakeholders.
• Measures should start at the top and flow down to the bottom.
• Measures need to have targets that are based on research and reality rather than be arbitrary.
24. What are the characteristics of an effective performance measurement system?
An effective performance measurement system should help do the following:
• Align top-level strategic objectives and bottom-level initiatives.
• Identify opportunities and problems in a timely fashion.
• Determine priorities and allocate resources based on those priorities.
• Change measurements when the underlying processes and strategies change.
• Delineate responsibilities, understand actual performance relative to responsibilities, and reward and recognize accomplishments.
• Take action to improve processes and procedures when the data warrant it.
• Plan and forecast in a more reliable and timely fashion.
25. What are the four perspectives in BSC?
The four perspectives in BSC are financial, customer, internal business processes, and learning/growth.
26. What does the term balanced refer to in BSC?
It refers to the balance in the combined set of measures used in a balanced scorecard. Specifically, the method attempts to achieve a balance between financial and non-financial indicators, between leading and lagging indicators, between internal and external indicators, between quantitative and qualitative indicators, and between short-term and long-term indicators. By so doing it hopes to eliminate some of the defects of traditional management measuring methods, such as the tendency to concentrate almost exclusively on internal, financial, quantitative lagging indicators.
27. How does a BSC align strategies and actions?
As a strategic management methodology, BSC enables an organization to align its actions with its overall strategies. BSC accomplishes this task through a series of interrelated steps. The specific steps that are involved vary from one book to the next. In their latest rendition, Kaplan and Norton (2008) lay out a six stage process:
1. Developing and formulating a strategy. Develop and clarify the organization’s mission, values, and vision; identify through strategic analysis the internal and external forces impacting the strategy; and define the organization’s strategic direction, specifying where and how the organization will compete.
2. Planning the strategy. Convert statements of strategic direction into specific objectives, measures, targets, initiatives, and budgets that guide actions and align the organization for effective strategy execution.
3. Aligning the organization. Ensure that business unit and support unit strategies are in line with the corporate strategy and that employees are motivated to execute the strategy.
4. Planning the operations. Ensure that the changes required by strategy are translated into changes in operational processes and that resource capacity, operational plans, and budgets reflect the directions and needs of the strategy.
5. Monitoring and learning. Determine through formal operational review meetings whether short-term financial and operational performance are in line with specified targets and through strategy review meetings whether the overall strategy is being executed successfully.
6. Testing and adapting the strategy. Determine through strategy testing and adapting meetings whether the strategy is working, whether fundamental assumptions are still valid, and whether the strategy needs to be modified or adapted over time.
28. What is a strategy map?
A strategy map is a graphic description of the relationships among the key organizational objectives for all four BSC perspectives. A strategy map begins at the top with financial objectives, moving down from there to customer objectives, internal objectives, and learning objectives.
29. What is a strategic theme?
Strategic themes split a strategy into several distinct value-creating processes. Each strategic theme represents a collection of related strategic objectives.
30. What does Six Sigma refer to?
The Greek letter sigma (σ) is the mathematical symbol for the standard deviation of a normal distribution. A deviation of six standard deviations from the norm is likely to occur about 3.4 times in one million. (About two-thirds of any sample is within one standard deviation of the mean; about 95 percent, within two.)
Actually, this is an oversimplification. The Six Sigma approach allows for the process mean to shift by 1.5σ, so the defect frequency of 3.4 per million is actually based on 4.5σ deviation from the worst expected process mean. A true 6σ deviation occurs less than once in 50 million samples for a normal distribution.
Today, the term Six Sigma refers to a structured methodology for quality improvement and control directed toward reducing process defects to this level. From a practical standpoint, that is essentially equivalent to eliminating them.
31. What are the basic processes in the DMAIC model?
The basic processes in the DMAIC model is define, measure, analyze, improve, and control.
32. What are some of the ways that the success of Six Sigma implementations is improved?
Six Sigma is integrated with business strategy. Six Sigma techniques are powerful in reducing process variation. Today, an increasing number of companies are implementing a Six Sigma approach to business excellence as part of the business strategy.
• Six Sigma supports business objectives. Successful deployments are based on some major business challenge or risk that the company can overcome only through Six Sigma. Identifying the challenge means all the company’s business leaders are clear about why the company is adopting strategies based on Six Sigma principles.
• Key executives are engaged in the process. A company must involve all key business leaders in helping to design its Six Sigma deployment. Managers will never fully support Six Sigma if they view it as taking away from their resources rather than adding capability and helping them become more successful in achieving their goals; nor will they actively support it if they think it is eating up vital budgetary allotments rather than setting the stage for significant financial payback.
• Project selection process is based on value potential. The most effective Six
Sigma companies have a rigorous project selection process driven by an evaluation of how much shareholder value a project can generate. It can be characterized as a trade-off decision comparing value delivered to effort expended.
• There is a critical mass of projects and resources. Some companies start their deployments by training a handful of people and launching a few “demonstration” projects. Others ramp-up for immediate corporate-wide deployment, training hundreds of Black Belts and launching dozens of projects within the first 6 months. In this context a Black Belt refers to an employee who is trained or certified in Six Sigma and who devotes 100% of his or her time to the execution of a Six Sigma project. Either approach is workable, but for every company there is a critical level of Six Sigma effort.
• Projects-in-process are actively managed. Given that most companies want to generate measurable, significant results within 6 months or a year, the tendency is to push as many projects into the Lean Six Sigma deployment as possible. It is better to focus on getting a few high-potential projects done right than to just flood the workplace with dozens of less-important projects. With the right resources working on the right projects, learning and results are maximized by short cycle times.
• Team leadership skills are emphasized. Use of Six Sigma does involve some technical skills—the ability to process and analyze data, for example. But good leadership skills are even more important. This emphasis on leadership also relates to how a company chooses people to fill Black Belt roles. Placing the most promising people in the Black Belt role is painful at first, yet it yields fast results and a rapid transformation of the organization.
• Results are rigorously tracked. Six Sigma results should “pay as you go” and be confirmed
33. How can BSC and Six Sigma be integrated?
The two can be integrated by using BSC on the front end, to identify performance weak-nesses and uncover opportunities for improvement. Six Sigma then follows as a method-ology for dealing with the underlying causes of a performance shortfall.
Six Sigma also defines an infrastructure to ensure that performance improvement activities have the necessary resources. It relies on a small group of critical roles to make this happen. This aspect of Six Sigma complements BSC; it does not conflict with it.
Companies that have successfully integrated BSC with Six Sigma were generally found to have achieved integration by five steps: translating their strategy into quantifi¬able objectives, cascading objectives through the organization, setting targets based on listening to customers, implementing strategic projects using Six Sigma, and executing processes in a consistent fashion to deliver business results.
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34. What is logical system architecture?
“The term system architecture refers to both the logical and physical design of a system. The logical design details the functional elements of a system and their interactions. The physical design specifies how the logical design is actually implemented and deployed across a specific set of technologies, such as desktop computers, servers, databases, com-munication protocols, and the like.”
35. What are the three key elements of a BPM system architecture?
The three key elements of a BPM system are: the database tier, the application tier, and the client (or user interface) tier.
Note that this is only one of many possible BPM system architectures. It is the one proposed by the BPM standards group, which gives it a certain credibility; it is with¬out question a good one; but students should understand that it is not the only possible one. As technology evolves over the decades that today’s students will be in the work force, tradeoffs will undoubtedly change. The ideal architecture for BPM will equally undoubtedly evolve with those changes.
Also, the architecture at the level of the one-line list of its key elements is also the architecture of many other information systems besides BPM. It is the further specifica-tion of those elements that makes it uniquely a BPM architecture. The question as written does not require them to be further specified in a correct answer. If you want more, you may want to be specific as to your requirements here. Alternatively, you may want to assign some of the following questions in addition.
36. Describe the major categories of BPM applications?
Budgeting, planning and forecasting
Profitability modeling and optimization
Scorecard applications
Financial consolidation
Statutory and financial reporting
37. What major change has occurred in the BPM market in the last 3 to 4 years?
Over the past 3 to 4 years, the biggest change in the BPM market has been the consolidation of the BPM vendors.
38. What are the basic categories in Gartner’s magic quadrant? Who are some of the vendors in the various categories?
Gartner’s Magic Quadrant is a 2×2 grid. One axis covers Gartner’s assessment of execu-tion: basically, the quality of a vendor’s products today. The other axis is their assessment of a vendor’s strategic vision. Both axes are divided into “strong” and “limited.” The four quadrants that result are labeled “Niche” (limited execution, limited vision); “Challen-gers” (strong execution, limited vision); “Visionaries” (limited execution, strong vision) and “Leaders” (strong execution, strong vision).
When Gartner publishes a quadrant, it positions vendors along a continuum on both axes. Two vendors may both have strategic vision in the “strong” half of the grid, but one may be portrayed as stronger than the other.
Vendors in each quadrant of the MQ for BPM suites include:
• Leaders: Hyperion Solutions, Cognos
• Challengers: SAP (the only vendor listed here; it is not possible to list “some vendors” in this category)
• Visionaries: Oracle CPM, Business Objects, others
• Niche: Oracle/PeopleSoft EPM, Lawson, others
Gartner’s rankings change from year to year as products evolve, visions change, and movement in the Gartner analyst community brings new perspectives. In addition, vendors in all segments of IT spend considerable effort to influence Gartner’s magic quadrant rankings ; as they learn what leads to a good MQ position, they can improve theirs by simply presenting their products and vision in a way that Gartner finds more compelling. A high ranking one year does not guarantee one the next.
39. What are the major differences between a scorecard and a dashboard?
40. What distinguishes an operational dashboard from a tactical dashboard?
They can be distinguished as follows:
An operational dashboard is used by frontline workers and supervisors to monitor key operational data that are lightly summarized and updated frequently throughout the day.
A tactical dashboard is used by managers and analysts to track detailed and summarized data generated from departmental processes and projects on a daily or weekly basis.
41. What layers of information are provided by a dashboard?
The most distinctive feature of a dashboard is its three layers of information:
1. Monitoring. Graphical, abstracted data to monitor key performance metrics.
2. Analysis. Summarized dimensional data to analyze the root cause of problems.
3. Management. Detailed operational data that identifies what actions to take to resolve a problem.
42. What are the characteristics of a well-designed dashboard?
• It uses visual components (e.g., charts, performance bars, sparklines, gauges, meters, stoplights) to highlight, at a glance, the data and exceptions that require action.
• It is transparent to the user, meaning that they require minimal training and are extremely easy to use.
• It combines data from a variety of systems into a single, summarized, unified view of the business.
• It enables drill-down or drill-through to underlying data sources or reports, pro-viding more detail about the underlying comparative and evaluative context.
• It presents a dynamic, real-world view with timely data refreshes, enabling the end user to stay up-to-date with any recent changes in the business.
• It requires little, if any, customized coding to implement, deploy, and maintain.
43. BPM encompasses five basic processes: strategize, plan, monitor, act and adjust. Select one of these processes and discuss the types of software tools and applications that are available to support it.
The section titled “BPM Applications” addresses this question. In it, Gartner is cited as saying that the majority of BPM processes at all levels can be handled by five types of applications: budgeting, planning and forecasting; profitability modeling and optimization; scorecard applications; financial consolidation; and statutory and financial reporting.
44. In recent years, the Beyond Budgeting Round Table (BBRT; bbrt.org) has called into question traditional budgeting practices. A number of articles on the Web discuss the BBRT’s position. In the BBRT’s view, what is wrong with today’s budgeting practices? What does the BBRT recommend as a substitute?
The BBRT feels that ten things are wrong with budgeting (http://www.bbrt.org/bbprob.htm):
Budgets are time-consuming and expensive
They provide poor value to their users
They fail to focus on shareholder value
They are too rigid and prevent fast response
They protect rather than reduce costs
They stifle product and strategy innovation
They focus on sales targets rather than customer satisfaction
They are divorced from strategy
They reinforce a dependency culture
They lead to unethical behavior
As a substitute, they recommend an adaptive model, where responsive processes replace the fixed budget; and decentralized management rather than the traditional fixed hierar-chy. They feel that companies that adopt their principles will benefit from having faster response, innovative strategies, lower costs, and more loyal customers.
45. Describe how a BSC fits the description of a diagnostic control system.
A diagnostic control system is defined as an information system with which it is possible to (1) set a goal in advance, (2) measure outputs, (3) compute or calculate absolute or relative performance variances, and (4) use the variance information as feed¬back to alter inputs and/or processes to bring performance back in line with present goals and standards. A balanced scorecard system enables all of these and can therefore be used diagnostically.
46. Distinguish performance management and performance measurement.
Performance measurement is finding out what happened. Performance management is based on performance measurement—the old management adage “you can’t manage what you can’t measure” may apply here—but goes beyond it, using its output to drive the overall enterprise performance.
47. The Performance Prism established by Andrew Neely and others at Cranfield University provides an alternative performance measurement and management framework. Using materials from the Web, discuss the major tenets of the framework. Compare the framework to BSC and Six Sigma.
Three Web information sources on Performance Prism are:
http://www.som.cranfield.ac.uk/som/research/centres/cbp/products/prism.asp
http://www.valuebasedmanagement.net/methods_performance_prism.html
http://en.wikipedia.org/wiki/Performance_Prism
These are short summaries. The first two have links to other information sources. A Web search will turn up many more. (The first URL redirects from www.performanceprism.com, which may be easier to remember. The second and third contain underscore characters that may be hidden by the underlines. If you see a space, it’s a single underscore.)
Three fundamental premises underpin the Performance Prism concept. First, it is no longer acceptable (or even feasible) for organizations to focus just on the needs of one or two of their stakeholders—typically shareholders and customers—if they wish to sur-vive and prosper in the long term. Second, an organization’s strategies, processes, and capabilities have to be aligned and integrated with one another if the organization is to be best positioned to deliver real value to all of its crucial stakeholders. Third, organizations and their stakeholders need to recognize that their relationships are reciprocal – stake-holders have to contribute to organizations, as well as expect something from them; rela-tionships are symbiotic and so there are interdependencies. (From the cited Wikipedia page, accessed November 21, 2006, with U.K. spelling changed to United States.)
The major difference between Performance Prism and the other frameworks is that PP begins with stakeholders, what they want/need and what they can offer, deriving everything else from that starting point. This perspective is implicit in the other frame-works. If the needs of a particular firm’s stakeholders are reasonably typical, the eventual strategies, plans and actions that will emerge from the PP methodology are not likely to differ significantly from those that would have emerged from BSC. If they are not typi-cal, BPM may overlook this to the organization’s detriment.
Since Six Sigma operates at a lower level than BSC it is likely to yield lower-level answers than either of the others.
48. Create a measure for some strategic objective of interest.
Such an objective for a company entering a brand new market might be a market share increase from 20 to 30 percent. For that objective, a possible measurement template might look like this:
49. Create a strategy for some hypothetical company, using the four perspectives of the BSC. Express the strategy as a series of strategic objectives. Produce a strategy map depicting the linkages among the objectives.
The four BSC perspectives are financial, customer, internal business processes, and learning and growth. A possible strategy for a (very!) hypothetical start-up might be “to leverage our anti-gravity patents to become a leading supplier of helicopters.”
Financial objectives would include revenue and profitability targets, appropriate to the early stage the company is in. These would probably include targets for raising venture capital.
Customer objectives would include lining up trial users and obtaining letters of intent.
Internal business process objectives would include targets for R&D and produc-tion, as well as the development of new products (elevators? forklifts? construction equipment? etc.) based on anti-gravity technology.
Learning and growth could involve developing the right culture for the new firm and continued research in anti-gravity.
The strategy map could look like this:
50. Compare and contrast the DMAIC model with the closed-loop processes of BPM.
The DMAIC model (the performance improvement model used in the Six Sigma methodology) and BPM are both closed-loop models. However, their purposes are different: BPM is for overall monitoring of an organization, while the DMAIC model is focused on improving performance of a process or area. Their emphasis and the resulting processes therefore differ. BPM has four processes (strategize, plan, monitor, act and adjust) while the DMAIC model has five (define, measure, analyze, improve, control). Specific differences between them include:
• BPM takes a more strategic approach. It begins with strategizing. DMAIC takes strategic objectives as given, and continues from there.
• The Plan process of BPM corresponds to the Define process of the DMAIC model.
• The DMAIC model, as fits its purpose, goes into more detail in the later (implementation) stages of the improvement process, which BPM lumps under “act and adjust.”
51. Gartner’s BPM magic quadrant lists the major software vendors that provide BPM suites. Compare and contrast two of the offerings (other than the Hyperion Solutions suite).
Open-ended answer, since there are so many possible combinations. (Some of the com-panies in the table may no longer exist, or may no longer be operating under the same names, when your students carry out this exercise. For example, ALG Software was purchased by Business Objects in late 2006. While it still uses its old name and can be found on the Web at www.algsoftware.com as this manual is being written, there is no guarantee that either situation will continue indefinitely.)
In answering this question your students will have to establish criteria for compa-rison. These can include product functionality/features, platform and compatibility consi-derations, and more.
They will also need to choose which products to compare, since most vendors in this list have more than one BPM offering. Ideally, they should find two that are directly comparable. For example, Cartesis offers a range of BPM products, some of which focus on cost and profitability analysis. ALG Software’s offerings, by contrast, are all about cost and profitability analysis. Comparing the two offerings overall will yield one set of answers. Comparing the Cartesis cost and profitability offering with ALG’s total product line will yield a different one.
“A framework for organizing, automating, and analyzing business methodologies, met-rics, processes, and systems to drive the overall performance of the enterprise. It helps organizations translate a unified set of objectives into plans, monitor execution, and deliver critical insight to improve financial and operational performance.”
2. How Does BPM differ from BI? How are they the same?
BPM is an outgrowth of BI and extends it. BI needs to be extended to support BPM properly.
• BPM is promoted and sold by the same companies that market and sell the BI tools and suites.
• BI has evolved so that many of the original differences between the two no longer exist (e.g., BI used to be focused on departmental rather than enterprise-wide projects).
• BI is a crucial element of BPM.
3. List the major BPM processes.
1. Strategize
2. Plan
3. Monitor
4. Act and Adjust
4. Why does a company need a well-formulated strategy?
“Without specific goals or objectives, it is difficult to evaluate alternative courses of action. Without specific priorities, there is no way to determine how to allocate resources among the alternatives selected. Without plans, there is no way to guide the actions among those working on the alternatives. Without analysis and evaluation, there is no way to determine which of the opportunities are succeeding or failing. Goals, objectives, priorities, plans, and critical thinking are all part of a well-defined strategy.”
5. What are the basic tasks in the strategic planning process?
1. Conduct a current situation analysis
2. Determine the planning horizon
3. Conduct an environmental scan
4. Identify critical success factors
5. Complete a gap analysis
6. Create a strategic vision
7. Develop a business strategy
8. Identify strategic objectives and goals
6. What are some of the sources of the gap between formulating a strategy and actually executing the strategy?
Communications, Alignment of rewards and Incentives, Focus, and Resources
7. What is the goal of operational planning?
An operational plan translates an organization’s strategic objectives and goals into a set of well-defined tactics and initiatives, resource requirements, and expected results for some future time period, usually, but not always, a year—in other words, to make the strategic plan into a useful guide for operational decision making.
8. What is tactic-centric planning? What is budget-centric planning?
These are two approaches to operational planning.
In tactic-centric planning, the focus is on arriving at tactics that will meet the strategic goals. After those have been arrived at, the cost of implementing them is consi-dered. If it exceeds the organization’s willingness to spend, the plan can be revised.
In budget-centric planning, the focus is on arriving at tactics that meet financial targets. After these have been arrived at, the results of using them are considered. If they do not meet the organization’s strategic goals, the plan can be revised.
9. What is the primary goal of a financial plan?
The primary goal is to allocate resources in line with the organization’s needs and priorities.
10. What are the critical questions that a monitoring framework answers?
What to monitor, and How to monitor
11. What are the key elements of a diagnostic control system?
Inputs, a process for transforming inputs into outputs, a standard against which to compare these outputs, and a feedback channel allowing information on variances to be communicated so that it can be acted upon.
12. What is management by exception?
A management approach whereby the great majority of management’s time and attention is focused on areas in which a diagnostic control system identified significant variations from the standard, in order to investigate the cause of the variation and initiate appropriate action.
13. What is one of the major pitfalls of variance analysis, from a managerial perspective?
A correct answer can discuss either:
1. Focus on identifying, diagnosing and correcting negative variances, thus failing to capitalize on opportunities that might be signaled by positive variances.
2. Take the comparison standard as given, not considering the possibility that changed circumstances or invalid assumptions might make the standard wrong rather than the process being at fault.
14. Why do 60 to 80 percent of all new projects or ventures fail?
A project can fail in a number of different ways, ranging from considering too few options or scenarios, failing to anticipate a competitor’s moves, ignoring changes in the economic or social environment, inaccurately forecasting demand, or underestimating the investment required to succeed, just to name a few of the possibilities. This
15. Describe the basic steps in Harrah’s closed-loop model.
1. The loop begins by defining quantifiable objectives of a marketing campaign or test procedure in the form of expected values or outcomes for customers who are in the experimental test group versus those in the control groups. The campaign is designed to provide the right offer and message at the right time. The selection of customers and their treatments are based on their prior experiences with Harrah’s.
2. Next, the campaign or test is executed. The campaign is designed to provide the right offer and message at the right time. The selection of particular customers and the treatments they receive are based on their prior experiences with Harrah’s.
3. Each customer’s response to the campaign is tracked. Not only are response rates measured, but other metrics are as well, such as revenues generated by the incentive and whether the incentive induced a positive change in behavior (e.g., increased frequency of visit, profitability of the visit, or cross-play among the various casinos).
4. The effectiveness of a campaign is evaluated by determining the net value of the campaign and its profitability relative to other campaigns.
5. Harrah’s learns which incentives have the most effective influence on customer behavior or provide the best profitability improvement. This knowledge is used to continuously refine its marketing approaches.
16. According to the Saxon Group’s research results, what are some of the performance management practices of the average company?
The overall impact of the planning and reporting practices of the average company was that management had little time to review results from a strategic perspective, decide what should be done differently, and act on the revised plans. The fact is that there was little tie between a company’s strategy, tactics, and expected outcomes (Axson, 2007).
17. Why do few companies have time to analyze their strategic and tactical results and take corrective action based on this analysis?
Because planning and reporting take so much time, management has little time left to review results from a strategic perspective, decide what should be done differently, and act on that decision.
Several other reasons are given in this section as well. A correct answer may reflect any of them.
18. What is a performance measurement system?
A system whose purpose is to “Assist managers in tracking the implementations of business strategy by comparing actual results against strategic goals and objectives. A performance measurement system typically comprises systematic methods of setting business goals together with periodic feedback reports that indicate progress against goals.”
19. What is a KPI, and what are its distinguishing characteristics?
KPIs are multidimensional. Loosely translated, this means that KPIs have a variety of distinguishing features, including:
• Strategy. KPIs embody a strategic objective.
• Targets. KPIs measure performance against specific targets. Targets are defined in strategy, planning, or budget sessions and can take different forms (e.g., achievement targets, reduction targets, absolute targets, etc.).
• Ranges. Targets have performance ranges (e.g., above, on, or below target).
• Encodings. Ranges are encoded in software, enabling the visual display of performance (e.g., green, yellow, red). Encodings can be based on percentages or more complex rules.
• Time frames. Targets are assigned time frames by which they must be accomplished. A time frame is often divided into smaller intervals to provide performance mileposts.
• Benchmarks. Targets are measured against a baseline or benchmark. The previous year’s results often serve as a benchmark, but arbitrary numbers or external benchmarks may also be used.
20. How does a KPI differ from an operational metric?
Most organizations collect a wide range of operational metrics. As the name implies, these metrics deal with the operational activities and performance of a company. The following list of examples illustrates the variety of operational areas covered by these metrics:
• Customer performance. Metrics for customer satisfaction, speed and accuracy of issue resolution, and customer retention.
• Service performance. Metrics for service-call resolution rates, service renewal rates, SLA compliance, delivery performance, and return rates.
• Sales operations. New pipeline accounts, sales meetings secured, conversion of inquiries to leads, and average call closure time.
• Sales plan/forecast. Metrics for price-to-purchase accuracy, purchase order to fulfillment ratio, quantity earned, forecast-to-plan ratio, and total closed contracts.
21. What are some of the drawbacks of relying solely on financial metrics for measuring performance?
The text cites these four:
• Financial measures are usually reported by organizational structures (e.g., research and development expenses) and not by the processes that produced them.
• Financial measures are lagging indicators, telling us what happened, not why it happened or what is likely to happen in the future.
• Financial measures (e.g., administrative overhead) are often the product of allocations that are not related to the underlying processes that generated them.
• Financial measures are focused on the short term, and provide little information about the longer term.
22. What is the principle of obliquity?
Michael Hammer’s principle of obliquity states that the measures management tracks are generally those which it cannot control directly (but only obliquely, hence the name of the principle). This leads to the conclusion that some way of influencing these measures through management action is necessary.
23. What are some of the characteristics of a “good” collection of performance measures?
The text cites the following five:
• Measures should focus on key factors.
• Measures should be a mix of past, present, and future.
• Measures should balance the needs of shareholders, employees, partners, suppliers, and other stakeholders.
• Measures should start at the top and flow down to the bottom.
• Measures need to have targets that are based on research and reality rather than be arbitrary.
24. What are the characteristics of an effective performance measurement system?
An effective performance measurement system should help do the following:
• Align top-level strategic objectives and bottom-level initiatives.
• Identify opportunities and problems in a timely fashion.
• Determine priorities and allocate resources based on those priorities.
• Change measurements when the underlying processes and strategies change.
• Delineate responsibilities, understand actual performance relative to responsibilities, and reward and recognize accomplishments.
• Take action to improve processes and procedures when the data warrant it.
• Plan and forecast in a more reliable and timely fashion.
25. What are the four perspectives in BSC?
The four perspectives in BSC are financial, customer, internal business processes, and learning/growth.
26. What does the term balanced refer to in BSC?
It refers to the balance in the combined set of measures used in a balanced scorecard. Specifically, the method attempts to achieve a balance between financial and non-financial indicators, between leading and lagging indicators, between internal and external indicators, between quantitative and qualitative indicators, and between short-term and long-term indicators. By so doing it hopes to eliminate some of the defects of traditional management measuring methods, such as the tendency to concentrate almost exclusively on internal, financial, quantitative lagging indicators.
27. How does a BSC align strategies and actions?
As a strategic management methodology, BSC enables an organization to align its actions with its overall strategies. BSC accomplishes this task through a series of interrelated steps. The specific steps that are involved vary from one book to the next. In their latest rendition, Kaplan and Norton (2008) lay out a six stage process:
1. Developing and formulating a strategy. Develop and clarify the organization’s mission, values, and vision; identify through strategic analysis the internal and external forces impacting the strategy; and define the organization’s strategic direction, specifying where and how the organization will compete.
2. Planning the strategy. Convert statements of strategic direction into specific objectives, measures, targets, initiatives, and budgets that guide actions and align the organization for effective strategy execution.
3. Aligning the organization. Ensure that business unit and support unit strategies are in line with the corporate strategy and that employees are motivated to execute the strategy.
4. Planning the operations. Ensure that the changes required by strategy are translated into changes in operational processes and that resource capacity, operational plans, and budgets reflect the directions and needs of the strategy.
5. Monitoring and learning. Determine through formal operational review meetings whether short-term financial and operational performance are in line with specified targets and through strategy review meetings whether the overall strategy is being executed successfully.
6. Testing and adapting the strategy. Determine through strategy testing and adapting meetings whether the strategy is working, whether fundamental assumptions are still valid, and whether the strategy needs to be modified or adapted over time.
28. What is a strategy map?
A strategy map is a graphic description of the relationships among the key organizational objectives for all four BSC perspectives. A strategy map begins at the top with financial objectives, moving down from there to customer objectives, internal objectives, and learning objectives.
29. What is a strategic theme?
Strategic themes split a strategy into several distinct value-creating processes. Each strategic theme represents a collection of related strategic objectives.
30. What does Six Sigma refer to?
The Greek letter sigma (σ) is the mathematical symbol for the standard deviation of a normal distribution. A deviation of six standard deviations from the norm is likely to occur about 3.4 times in one million. (About two-thirds of any sample is within one standard deviation of the mean; about 95 percent, within two.)
Actually, this is an oversimplification. The Six Sigma approach allows for the process mean to shift by 1.5σ, so the defect frequency of 3.4 per million is actually based on 4.5σ deviation from the worst expected process mean. A true 6σ deviation occurs less than once in 50 million samples for a normal distribution.
Today, the term Six Sigma refers to a structured methodology for quality improvement and control directed toward reducing process defects to this level. From a practical standpoint, that is essentially equivalent to eliminating them.
31. What are the basic processes in the DMAIC model?
The basic processes in the DMAIC model is define, measure, analyze, improve, and control.
32. What are some of the ways that the success of Six Sigma implementations is improved?
Six Sigma is integrated with business strategy. Six Sigma techniques are powerful in reducing process variation. Today, an increasing number of companies are implementing a Six Sigma approach to business excellence as part of the business strategy.
• Six Sigma supports business objectives. Successful deployments are based on some major business challenge or risk that the company can overcome only through Six Sigma. Identifying the challenge means all the company’s business leaders are clear about why the company is adopting strategies based on Six Sigma principles.
• Key executives are engaged in the process. A company must involve all key business leaders in helping to design its Six Sigma deployment. Managers will never fully support Six Sigma if they view it as taking away from their resources rather than adding capability and helping them become more successful in achieving their goals; nor will they actively support it if they think it is eating up vital budgetary allotments rather than setting the stage for significant financial payback.
• Project selection process is based on value potential. The most effective Six
Sigma companies have a rigorous project selection process driven by an evaluation of how much shareholder value a project can generate. It can be characterized as a trade-off decision comparing value delivered to effort expended.
• There is a critical mass of projects and resources. Some companies start their deployments by training a handful of people and launching a few “demonstration” projects. Others ramp-up for immediate corporate-wide deployment, training hundreds of Black Belts and launching dozens of projects within the first 6 months. In this context a Black Belt refers to an employee who is trained or certified in Six Sigma and who devotes 100% of his or her time to the execution of a Six Sigma project. Either approach is workable, but for every company there is a critical level of Six Sigma effort.
• Projects-in-process are actively managed. Given that most companies want to generate measurable, significant results within 6 months or a year, the tendency is to push as many projects into the Lean Six Sigma deployment as possible. It is better to focus on getting a few high-potential projects done right than to just flood the workplace with dozens of less-important projects. With the right resources working on the right projects, learning and results are maximized by short cycle times.
• Team leadership skills are emphasized. Use of Six Sigma does involve some technical skills—the ability to process and analyze data, for example. But good leadership skills are even more important. This emphasis on leadership also relates to how a company chooses people to fill Black Belt roles. Placing the most promising people in the Black Belt role is painful at first, yet it yields fast results and a rapid transformation of the organization.
• Results are rigorously tracked. Six Sigma results should “pay as you go” and be confirmed
33. How can BSC and Six Sigma be integrated?
The two can be integrated by using BSC on the front end, to identify performance weak-nesses and uncover opportunities for improvement. Six Sigma then follows as a method-ology for dealing with the underlying causes of a performance shortfall.
Six Sigma also defines an infrastructure to ensure that performance improvement activities have the necessary resources. It relies on a small group of critical roles to make this happen. This aspect of Six Sigma complements BSC; it does not conflict with it.
Companies that have successfully integrated BSC with Six Sigma were generally found to have achieved integration by five steps: translating their strategy into quantifi¬able objectives, cascading objectives through the organization, setting targets based on listening to customers, implementing strategic projects using Six Sigma, and executing processes in a consistent fashion to deliver business results.
.
34. What is logical system architecture?
“The term system architecture refers to both the logical and physical design of a system. The logical design details the functional elements of a system and their interactions. The physical design specifies how the logical design is actually implemented and deployed across a specific set of technologies, such as desktop computers, servers, databases, com-munication protocols, and the like.”
35. What are the three key elements of a BPM system architecture?
The three key elements of a BPM system are: the database tier, the application tier, and the client (or user interface) tier.
Note that this is only one of many possible BPM system architectures. It is the one proposed by the BPM standards group, which gives it a certain credibility; it is with¬out question a good one; but students should understand that it is not the only possible one. As technology evolves over the decades that today’s students will be in the work force, tradeoffs will undoubtedly change. The ideal architecture for BPM will equally undoubtedly evolve with those changes.
Also, the architecture at the level of the one-line list of its key elements is also the architecture of many other information systems besides BPM. It is the further specifica-tion of those elements that makes it uniquely a BPM architecture. The question as written does not require them to be further specified in a correct answer. If you want more, you may want to be specific as to your requirements here. Alternatively, you may want to assign some of the following questions in addition.
36. Describe the major categories of BPM applications?
Budgeting, planning and forecasting
Profitability modeling and optimization
Scorecard applications
Financial consolidation
Statutory and financial reporting
37. What major change has occurred in the BPM market in the last 3 to 4 years?
Over the past 3 to 4 years, the biggest change in the BPM market has been the consolidation of the BPM vendors.
38. What are the basic categories in Gartner’s magic quadrant? Who are some of the vendors in the various categories?
Gartner’s Magic Quadrant is a 2×2 grid. One axis covers Gartner’s assessment of execu-tion: basically, the quality of a vendor’s products today. The other axis is their assessment of a vendor’s strategic vision. Both axes are divided into “strong” and “limited.” The four quadrants that result are labeled “Niche” (limited execution, limited vision); “Challen-gers” (strong execution, limited vision); “Visionaries” (limited execution, strong vision) and “Leaders” (strong execution, strong vision).
When Gartner publishes a quadrant, it positions vendors along a continuum on both axes. Two vendors may both have strategic vision in the “strong” half of the grid, but one may be portrayed as stronger than the other.
Vendors in each quadrant of the MQ for BPM suites include:
• Leaders: Hyperion Solutions, Cognos
• Challengers: SAP (the only vendor listed here; it is not possible to list “some vendors” in this category)
• Visionaries: Oracle CPM, Business Objects, others
• Niche: Oracle/PeopleSoft EPM, Lawson, others
Gartner’s rankings change from year to year as products evolve, visions change, and movement in the Gartner analyst community brings new perspectives. In addition, vendors in all segments of IT spend considerable effort to influence Gartner’s magic quadrant rankings ; as they learn what leads to a good MQ position, they can improve theirs by simply presenting their products and vision in a way that Gartner finds more compelling. A high ranking one year does not guarantee one the next.
39. What are the major differences between a scorecard and a dashboard?
Characteristic
|
Dashboard
|
Scorecard
|
Purpose
|
Measures
performance
|
Charts progress
|
Users
|
Supervisors, specialists
|
Executives,
managers, staff
|
Updates
|
“Right-time”
feeds
|
Periodic snapshots
|
Data
|
Events
|
Summaries
|
Display
|
Visual graphs,
raw data
|
Visual graphs, text
comments
|
40. What distinguishes an operational dashboard from a tactical dashboard?
They can be distinguished as follows:
An operational dashboard is used by frontline workers and supervisors to monitor key operational data that are lightly summarized and updated frequently throughout the day.
A tactical dashboard is used by managers and analysts to track detailed and summarized data generated from departmental processes and projects on a daily or weekly basis.
41. What layers of information are provided by a dashboard?
The most distinctive feature of a dashboard is its three layers of information:
1. Monitoring. Graphical, abstracted data to monitor key performance metrics.
2. Analysis. Summarized dimensional data to analyze the root cause of problems.
3. Management. Detailed operational data that identifies what actions to take to resolve a problem.
42. What are the characteristics of a well-designed dashboard?
• It uses visual components (e.g., charts, performance bars, sparklines, gauges, meters, stoplights) to highlight, at a glance, the data and exceptions that require action.
• It is transparent to the user, meaning that they require minimal training and are extremely easy to use.
• It combines data from a variety of systems into a single, summarized, unified view of the business.
• It enables drill-down or drill-through to underlying data sources or reports, pro-viding more detail about the underlying comparative and evaluative context.
• It presents a dynamic, real-world view with timely data refreshes, enabling the end user to stay up-to-date with any recent changes in the business.
• It requires little, if any, customized coding to implement, deploy, and maintain.
43. BPM encompasses five basic processes: strategize, plan, monitor, act and adjust. Select one of these processes and discuss the types of software tools and applications that are available to support it.
The section titled “BPM Applications” addresses this question. In it, Gartner is cited as saying that the majority of BPM processes at all levels can be handled by five types of applications: budgeting, planning and forecasting; profitability modeling and optimization; scorecard applications; financial consolidation; and statutory and financial reporting.
44. In recent years, the Beyond Budgeting Round Table (BBRT; bbrt.org) has called into question traditional budgeting practices. A number of articles on the Web discuss the BBRT’s position. In the BBRT’s view, what is wrong with today’s budgeting practices? What does the BBRT recommend as a substitute?
The BBRT feels that ten things are wrong with budgeting (http://www.bbrt.org/bbprob.htm):
Budgets are time-consuming and expensive
They provide poor value to their users
They fail to focus on shareholder value
They are too rigid and prevent fast response
They protect rather than reduce costs
They stifle product and strategy innovation
They focus on sales targets rather than customer satisfaction
They are divorced from strategy
They reinforce a dependency culture
They lead to unethical behavior
As a substitute, they recommend an adaptive model, where responsive processes replace the fixed budget; and decentralized management rather than the traditional fixed hierar-chy. They feel that companies that adopt their principles will benefit from having faster response, innovative strategies, lower costs, and more loyal customers.
45. Describe how a BSC fits the description of a diagnostic control system.
A diagnostic control system is defined as an information system with which it is possible to (1) set a goal in advance, (2) measure outputs, (3) compute or calculate absolute or relative performance variances, and (4) use the variance information as feed¬back to alter inputs and/or processes to bring performance back in line with present goals and standards. A balanced scorecard system enables all of these and can therefore be used diagnostically.
46. Distinguish performance management and performance measurement.
Performance measurement is finding out what happened. Performance management is based on performance measurement—the old management adage “you can’t manage what you can’t measure” may apply here—but goes beyond it, using its output to drive the overall enterprise performance.
47. The Performance Prism established by Andrew Neely and others at Cranfield University provides an alternative performance measurement and management framework. Using materials from the Web, discuss the major tenets of the framework. Compare the framework to BSC and Six Sigma.
Three Web information sources on Performance Prism are:
http://www.som.cranfield.ac.uk/som/research/centres/cbp/products/prism.asp
http://www.valuebasedmanagement.net/methods_performance_prism.html
http://en.wikipedia.org/wiki/Performance_Prism
These are short summaries. The first two have links to other information sources. A Web search will turn up many more. (The first URL redirects from www.performanceprism.com, which may be easier to remember. The second and third contain underscore characters that may be hidden by the underlines. If you see a space, it’s a single underscore.)
Three fundamental premises underpin the Performance Prism concept. First, it is no longer acceptable (or even feasible) for organizations to focus just on the needs of one or two of their stakeholders—typically shareholders and customers—if they wish to sur-vive and prosper in the long term. Second, an organization’s strategies, processes, and capabilities have to be aligned and integrated with one another if the organization is to be best positioned to deliver real value to all of its crucial stakeholders. Third, organizations and their stakeholders need to recognize that their relationships are reciprocal – stake-holders have to contribute to organizations, as well as expect something from them; rela-tionships are symbiotic and so there are interdependencies. (From the cited Wikipedia page, accessed November 21, 2006, with U.K. spelling changed to United States.)
The major difference between Performance Prism and the other frameworks is that PP begins with stakeholders, what they want/need and what they can offer, deriving everything else from that starting point. This perspective is implicit in the other frame-works. If the needs of a particular firm’s stakeholders are reasonably typical, the eventual strategies, plans and actions that will emerge from the PP methodology are not likely to differ significantly from those that would have emerged from BSC. If they are not typi-cal, BPM may overlook this to the organization’s detriment.
Since Six Sigma operates at a lower level than BSC it is likely to yield lower-level answers than either of the others.
48. Create a measure for some strategic objective of interest.
Such an objective for a company entering a brand new market might be a market share increase from 20 to 30 percent. For that objective, a possible measurement template might look like this:
| Measurement | Property | Explanation |
| Name | What is it called, and is it understandable? | Market share increase; yes |
| Purpose | Why is it being used, and what actions is it encouraging? | Used to measure improvement in our competitive position in our industry; encourages sales |
| Relates to | What strategies does it support, and what other measures is it linked to? | Supports strategy of expanding market penetration to obtain new customers while market is still in early growth stages; linked to shipments |
| Metric/formula | What is the actual measurement? | Ratio of sales revenue to total market size using public industry data |
| Target level(s) | What is the desirable level of performance? | 30 percent |
| Frequency | How often is the measurement made and reported? | Monthly |
| Source of data | Where do the data come from? | Our data: accounting; industry data: IDC |
| Who measures | What are the name and function of the person responsible for collecting, collating, and analyzing the data? | John Doe, Business Analyst |
| Who acts on the data (owner) | Who—name and function—is responsible for ensuring the performance levels? | Jane Roe, VP of Sales |
| What do they do | How will the owner use the data, and what actions can he or she take to improve performance? | If the data do not show an increase in market share tending toward at least 30 percent, she will use this as evidence of a need to develop new sales programs to achieve it |
| Efficiency | Are all the data that are being collected used? | They will be |
| Are there easier ways to collect the data? | No, as far as we know | |
| Is there any duplication among the measures? | No | |
| Can the amount of data being collected be reduced through sampling? | No; it must be collected for other reasons in any case | |
| Can the frequency of collection or reporting be reduced? | No; monthly collection frequency is required for other reasons | |
| Can the measure be eliminated because it is no longer being used? | No; it is being used | |
| Are there new tools that can be used to produce the measure in new ways? | No | |
| Effectiveness | Are all key processes adequately measured? | Yes |
| Are proper process measures in place to keep performance within acceptable limits? | Yes | |
| Is everyone getting the information they need? | Yes | |
| Does everyone understand the measures so they can interpret the | Yes | |
| Are users taking action as a result of the measures? | Yes | |
| Can the measures be easily used? | Yes | |
| Are the measures sufficiently timely and accurate? | Yes | |
| Does everyone have access to the measures they need? | Yes | |
| Is the relative impact of different measures clear to users? | Yes | |
| Have the measures been changed to reflect changes in processes? | N/A, processes have not changed |
49. Create a strategy for some hypothetical company, using the four perspectives of the BSC. Express the strategy as a series of strategic objectives. Produce a strategy map depicting the linkages among the objectives.
The four BSC perspectives are financial, customer, internal business processes, and learning and growth. A possible strategy for a (very!) hypothetical start-up might be “to leverage our anti-gravity patents to become a leading supplier of helicopters.”
Financial objectives would include revenue and profitability targets, appropriate to the early stage the company is in. These would probably include targets for raising venture capital.
Customer objectives would include lining up trial users and obtaining letters of intent.
Internal business process objectives would include targets for R&D and produc-tion, as well as the development of new products (elevators? forklifts? construction equipment? etc.) based on anti-gravity technology.
Learning and growth could involve developing the right culture for the new firm and continued research in anti-gravity.
The strategy map could look like this:
50. Compare and contrast the DMAIC model with the closed-loop processes of BPM.
The DMAIC model (the performance improvement model used in the Six Sigma methodology) and BPM are both closed-loop models. However, their purposes are different: BPM is for overall monitoring of an organization, while the DMAIC model is focused on improving performance of a process or area. Their emphasis and the resulting processes therefore differ. BPM has four processes (strategize, plan, monitor, act and adjust) while the DMAIC model has five (define, measure, analyze, improve, control). Specific differences between them include:
• BPM takes a more strategic approach. It begins with strategizing. DMAIC takes strategic objectives as given, and continues from there.
• The Plan process of BPM corresponds to the Define process of the DMAIC model.
• The DMAIC model, as fits its purpose, goes into more detail in the later (implementation) stages of the improvement process, which BPM lumps under “act and adjust.”
51. Gartner’s BPM magic quadrant lists the major software vendors that provide BPM suites. Compare and contrast two of the offerings (other than the Hyperion Solutions suite).
Open-ended answer, since there are so many possible combinations. (Some of the com-panies in the table may no longer exist, or may no longer be operating under the same names, when your students carry out this exercise. For example, ALG Software was purchased by Business Objects in late 2006. While it still uses its old name and can be found on the Web at www.algsoftware.com as this manual is being written, there is no guarantee that either situation will continue indefinitely.)
In answering this question your students will have to establish criteria for compa-rison. These can include product functionality/features, platform and compatibility consi-derations, and more.
They will also need to choose which products to compare, since most vendors in this list have more than one BPM offering. Ideally, they should find two that are directly comparable. For example, Cartesis offers a range of BPM products, some of which focus on cost and profitability analysis. ALG Software’s offerings, by contrast, are all about cost and profitability analysis. Comparing the two offerings overall will yield one set of answers. Comparing the Cartesis cost and profitability offering with ALG’s total product line will yield a different one.
